@M-MTax wrote:
Your fiancé needs to keep meticulous records of your cost basis, in case the broker does not.
The cost basis and the market value on the date of the gift will be on the 709. Just retain the 709.
That's not enough (well, probably not). You really should check with the broker before you make the gift.
If you have been investing over time, you have a number of shares that all have different cost bases. Just guessing at a fund name ("Vanguard index fund") I find for example VFIAX, which has a share price of between $200 and $500 over the past 10 years. If you invested $1000 per year, you might have bought 5 shares in 2014, 5 shares in 2015, and so on, but only 2 shares in 2024. You might have 35 shares worth $17,500 with a cost basis of $10,000. That's all well and good, assuming you give all 35 shares to your fiancée.
However, what happens when your fiancee wants to sell some shares to pay for (oh, I don't know, maybe a wedding 😉). If she closes her position, her basis is $10,000. But what if she only wants to raise $5000 so she sells 10 shares. Is she selling the first shares (cost basis $2000), or the most recent 10 shares (cost basis $5000). Does she know which shares she is selling? Does the broker know which shares she is selling? The broker knows if you sell the shares, and you can choose first-in or last-in method. But did the broker transfer those records to your fiancee when the gift was made?
If the broker reports the 1099-B as "basis unknown" then your fiancee needs to report the basis herself and be able to prove it if audited, and also needs to know which shares she claims to be selling now so she will know what shares she has left to sell later.
And if you only give your fiancee some of your shares in a particular fund, which shares are you giving and what is their basis? Different shares have different bases depending on when you bought them. Do you want to give her the oldest shares or the newest shares?
Maybe I am overthinking this and the broker will take care of everything. But I would ask first.
